CU Exam: 2021 Hons Paper Solved

4th Semester : Paper – CC-4.1 Ch

Solved as per provision of A.Y. 2022-23
Wherever reference to page number is given, it is referred to Taxation I by Mundhra & Mundhra published by Law Point

Question 1

  1. What do you mean by the term ‘assessment year’?
  2. Mention any two circumstances where income of previous year is assessed in the same year.
  3. Determine the status of the following persons:
    1. ABCD, an alumni association of students.
    2. Sonarpur Municipality.
  4. Mention any two fully exempted incomes.

Answer 1

(a) Refer Page 5 (b) Refer Page 7 (c) (i) AOP/BOI (ii) Local Authority (d) Refer Page 61

Question 2

Das has received the following amounts during the previous year ending on March 31, 2022:

  1. Income from house property in Sri Lanka received therein ₹ 22,500.
  2. Income from salary in India ₹ 1,20,000.
  3. Dividend from an Indian company received in China ₹ 25,000 (gross).
  4. Income from business controlled from Bangladesh ₹ 37,500.
  5. ₹ 10,000 earned in England during the previous year 2019-20 was brought to India.

Compute the Gross Total Income of Mr. Das if he is:

  1. Ordinarily resident
  2. Not ordinarily resident and
  3. Non-resident

Answer 2

Calculation of income liable to be taxed in India of Mr. Das for the A.Y.2021-22
ParticularsResident & Ordinarily residentResident but not ordinarily residentNon-resident
Income from house property in Sri Lanka received therein22,500
Income from salary in India1,20,0001,20,0001,20,000
Dividend from an Indian company received in China25,00025,00025,000
Income from business controlled from Bangladesh37,500
(It is assumed that the income is not related to India)
Past year income
Income liable to tax in India2,05,0001,45,0001,45,000

Question 3

  1. Define agricultural income
  2. Mr. Vishal retired from service on 31.10.2021 and received ₹ 5,00,000 as gratuity. He was entitled to a pension of ₹ 10,000 per month w.e.f. 01.11.2021. From 01.01.2022 he commuted 50% of his pension and received ₹ 3,00,000 as commuted pension. Compute his taxable amount of pension for the assessment year 2022-2023.

Answer 3

  1. Refer Page 78
  2. Computation of Taxable Pension of Mr. Vishal for the A.Y.2022-23
    Uncommuted Pension  
    (₹ 10,000 * 2) 120,000 
    (₹ 5,000 * 3) 215,00035,000
    Commuted Pension3,00,000 
    Less: Exempted u/s 10(10A)(ii) 1/3rd of ₹ 6,00,000 32,00,0001,00,000
    Taxable Pension 1,35,000
    1. From 1/11/2021 to 31/12/2021: 100% pension is in uncommuted form
    2. From 1/1/2022 to 31/3/2022: 50% pension is in uncommuted form as 50% pension being commuted.
    3. Commuted amount for 50% of pension = ₹ 3,00,000

    Therefore, commuted amount for 100% of pension = ₹ 6,00,000

Question 4

Mala Sen, furnishes the following information for the previous year 2021-22. Compute her income from other sources for the assessment year 2022-23.

  1. Winning from lottery after deducting tax @ 31·2% ₹ 1,37,600 (expenses incurred ₹ 2,000).
  2. ₹ 40,000 received as interest from Government securities
  3. Dividend from Tata Steel ₹ 30,000.
  4. Family pension received ₹ 48,000.
  5. Income from agriculture land situated in Bangladesh ₹ 24,000.

Answer 4

Computation of Income from Other Sources of Mrs. Mala Sen for the A.Y. 2022-23

Winning from lottery [₹ 1,37,600/31.2%] 2,00,000
Interest from Government Securities 40,000
Dividend from Tata Steel 30,000
Family Pension48,000 
Less: Standard Deduction [Lower of ₹ 15,000 or 1/3rd of pension]15,00033,000
Income from agriculture land situated in Bangladesh 24,000
Income from Other Sources3,27,000

It is assumed that she is an ordinarily resident.

Question 5

From the following particulars, compute Gross Total Income and losses to be carried forward by Sk. Rasidul Alam for the assessment year 2022-23:

Income from salary (Taxable)7,00,000
Income from House Property: 
House-I (Let out)  (–) 7,37,500
House-II (Self occupied, Interest on borrowed money)(–) 22,500
Income from speculation business31,250
Short-term capital gain30,000
Long-term capital loss62,500
Speculation business loss of assessment year 2021-2237,500
Short-term capital loss of assessment year 2021-2220,000

Answer 5

Computation of gross total income of Sk. Rasidul Alam for the A.Y. 2022-23
Income from house property
House-I (Let out)(7,37,500)
House-II (Self occupied, Interest on borrowed money) [Max](22,500)(2,00,000)
Balance shall be carried forward to next year5,60,000
Profits and gains of business or profession
Income from speculation business31,250
Less: Brought forward Speculation business loss of A.Y. 2021-2231,250Nil
Capital gains
Short term capital gain30,000
Less: Brought forward Short-term capital loss of A.Y. 2021-2220,00010,000
Gross Total Income5,10,000
Loss to be carried forward for subsequent assessment years:
  1. Speculation loss of A.Y. 2021-22 ₹ 6,250
  2. Loss under the income from house property of ₹ 5,60,000
  3. Long term capital loss of ₹ 62,500

Question 6

  1. From the following details for the previous year 2021-22, compute depreciation
    and/or capital gain (or loss) for the relevant assessment year:
    W.D.V. of the block of plant and machinery on 01.04.20212,00,000
    (consisting of plants X and Y-depreciation rate 15%) 
    Cost of plant Z acquired on 19.11.21 (depreciation 15%)1,00,000
    Case (i): All plants are sold for ₹ 2,80,000 
    Case (ii): Plant X and Y are sold for ₹ 2,80,000 
  2. Discuss the admissibility of the following expenses in case of an individual businessman Sandip Sarkar under the relevant provisions of the Income Tax Act.
    1. A cash payment of ₹ 50,000 made to a creditor who refused to accept a cheque.
    2. A sum of ₹ 1,00,000 on account of interest on term loan was paid one month after the due date of submission of return.

Answer 6

  1. Computation of Depreciation / STCG as per I.T. Act for the A.Y.2022-23
    ParticularsCase (i)Case (ii)
    Block 1: Plant & Machinery (Rate of depreciation: 15%)  
    W.D.V. as on 1/4/20212,00,0002,00,000
    Add: Purchase during the year1,00,0001,00,000
    Less: Asset sold during the year2,80,0002,80,000
    W.D.V. as on 31/03/202120,000
    Short Term Capital Gain(20,000) 
    Depreciation (15% of ₹ 20,000 for half year) 1,500

    Asset which is put to use for less than 180 days is eligible for ½ year depreciation.

    1. Entire payment of ₹ 50,000 shall be disallowed u/s 40A(3)
    2. Such interest shall be allowed in the next assessment year. [Sec. 43B] 

Question 7

  1. Discuss in brief about the provision of clubbing of income of a minor.
  2. State the amount of deduction available for interest on loan u/s 24(b) in case of a self-occupied property.

Answer 7

(a) Refer Page 497 (b) Refer Page 244

Question 8

Nitisha has made the following investments/payments during the previous year 2022-23:

Contribution to Recognised Provident Fund25,000
Deposit in Public Provident Fund1,00,000
Life insurance premium paid on own life 
(Sum assured ₹ 1,00,000 taken on 10.10.2010)25,000
Life insurance premium on daughter 
(Policy value ₹ 1,20,000 taken on 01.01.2015)15,000
Life insurance premium paid on mother’s life 
(Policy value ₹ 2,00,000 taken on 15.12.2018)20,000
Purchase of NSC (VIII issue)10,000
Accrued interest on NSC (including last year’s interest of ₹ 1,000)6,000
Repayment of home loan to SBI (including principal ₹ 10,000)50,000
Calculate the amount of deduction under section 80C. 

Answer 8

Computation of Deduction u/s 80C
Contribution to Recognised Provident Fund25,000
Deposit in Public Provident Fund1,00,000
Life insurance premium paid on own life [upto 20% of sum assured]20,000
Life insurance premium on daughter [upto 10% of sum assured]12,000
Life insurance premium paid on mother’s lifeNot Eligible
Purchase of NSC (VIII issue)10,000
Accrued interest on NSC (excluding 6th year’s interest)5,000
Repayment of home loan to SBI – Principal Amount10,000
Qualifying amount1,82,000
Deduction u/s 80C (Maximum Limit)1,50,000

Question 9

Surajit Roy is the Managing Director of ABC Ltd. (a private limited company) in Kolkata. He furnishes the following particulars of his income for the financial year 2021-22:

    1. Basic salary @ ₹ 40,000 per month
    2. Dearness allowance @ 50% of basic salary (forming part of salary for computation of retirement benefits)
    3. House rent allowance ₹ 2,500 p.m. During the year 2021-22, he stayed in a rented house in Kolkata paying monthly rent of ₹ 3,000.
    4. Children education allowance received @ ₹ 200 p.m. per child for his three children.
    5. Medical allowance received @ ₹ 600 p.m. (Actual medical expenses incurred by him during the year amounted to ₹ 5,000).
    6. He contributes 15% of salary to recognised Provident Fund. His employer also makes a matching contribution.
    7. Interest credited to Recognised Provident Fund @ 12% p.a. amounted to ₹ 9,600.
    8. His employer provided a 1200 c.c. car. He used the car both for official and private purposes. All expenses are borne by his employer.
    9. He was provided with a servant for his domestic work. His employer paid ₹ 1,500 per month to the servant.
    10. Professional tax of Mr. Roy @ ₹ 200 p.m. was also paid by his employer.

Compute the income from salary of Mr. Surajit Roy for the assessment year 2022-23.

Answer 9

Computation of Salaries of Mr. Surajit Roy for the A.Y.2022-23

Basic   4,80,000
Dearness allowance  2,40,000 
House Rent Allowance 30,000  
Less: Min. of the following is exempt u/s 10(13A)    
a. Actual HRA30,000   
b. 50% of salary3,60,000   
c. Rent paid – 10% of salary [₹ 36,000 – ₹ 72,000]NilNil30,000 
Children Education allowance [₹ 200 x 3 x 12] 7,200  
Less: Exempted [₹ 100 x 2 x 12] 2,4004,800 
Medical allowance  7,2002,82,000
Perquisites u/s 17(2):    
Car facility [₹ 1,800 x 12]  21,600 
Domestic helper  18,000 
Professional Tax  2,40042,000
Employer’s contribution to RPF₹ 7,20,000 x 15%1,08,000  
Less: Exempted 84,60021,600 
Interest @ 12% on RPF 9,600  
Less: Exempted 7,6002,00023,600
Gross Salary   8,27,600
Less: Standard Deduction u/s 16(ia)  50,000 
Less: Professional Tax u/s 16(iii)  2,40052,400
Taxable Salary  7,75,200

Notes : Salary for the purpose of

Basic salary4,80,0004,80,000
Dearness allowance2,40,0002,40,000
House Rent allowance  
Children Education allowance  
Medical Allowance  

Question 10

Sayani Mallick furnished the following information for the previous year 2021-22:

 House – IHouse – II
Where situatedKolkataMidnapur
Purpose of useLet outSelf-occupied
Construction completed on20.03.201425.08.2016
Gross Municipal Value (₹)3,75,0003,12,500
Fair rent (₹)7,50,0005,00,000
Annual rent (₹)9,00,000
Standard rent (₹)6,87,500
Vacancy period3 months
Municipal tax (₹)40,00015,000
Interest on loan (₹)31,250
Loan taken for construction @8% p.a. (₹) 25,00,000
(Date of taking the loan)(30.09.12)

Other information: In case of House – I, municipal tax for the last quarter remains unpaid.

Compute ‘Income from house property’ for Mrs. Mallick for the Assessment Year 2022-23.

Answer 10

Computation of Total Income of Mrs. Sayani Mallick for the A.Y. 2022-23
House 1: Let out
Gross Annual Value6,75,000
Less: Municipal Tax (₹ 40,000/4 x 3)30,000
Net Annual Value (NAV)6,45,000
Less: Deduction u/s
24(a) Standard Deduction @ 30% of NAV1,93,500
24(b) Interest on loan31,2502,24,7504,20,250
House 2: Self Occupied
Net Annual Value (NAV)Nil
Less: Deduction u/s
24(b) Interest on loan [₹ 25,00,000 x 8%]2,00,000(2,00,000)
Income from House Property2,20,250
  1. Computation of GAV
    StepParticularsHouse 1
    2Actual rent received6,75,000
    3Higher of RER and ARR6,87,500
    #Till step 3, ARR is less than RER due to vacancy [otherwise ARR would have been ₹ 9,00,000. Therefore, GAV (due to step 4) will be the ARR computed in step 2.

Question 11

Suraj Soren submits the following profit and loss account of his business for the year ended 31.03.2022:

ParticularsAmount (₹)ParticularsAmount (₹)
To Opening Stock67,500By Sales7,35,000
To Purchases5,25,000By Interest on Fixed Deposit15,000
To Interest on capital3,000By Bad Debt Recovery4,500
To Depreciation33,000(Disallowed earlier year)
To Legal expenses9,000By Closing Stock75,000
To Salaries31,500
To Payment to IIT, Delhi for Scientific research9,000
To Life Insurance Premium7,500
To Bad Debt7,500
To Advertisement45,000
To Provision for Bad Debts1,500
To Provision for Income Tax15,000
To Net Profit75,000
Other information:
  1. Salary include ₹ 9,000 paid to Mr. Soren.
  2. Depreciation as per IT rules ₹ 37,500.
  3. Legal Charges include ₹ 3,000 paid as penalty for infringement of Customs Law.
  4. Sales include ₹ 30,000 being the value of goods withdrawn by the proprietor, cost of which is ₹ 27,000.
  5. Closing stock overvalued by ₹ 7,500.
Compute income from business of Mr. Soren for the Assessment Year 2022-23

Answer 11

Computation of Profits and gains of business or profession of Shri Suraj Soren for the A.Y. 2022-23

Net profit as per Profit and Loss account  75,000
Add: Expenditure disallowed but debited in P/L A/c   
Interest on capital13,000 
LIC Premium37,500 
Provision for Bad Debts41,500 
Provision for Income Tax515,000 
Salary to himself69,000 
Cost of goods sold to himself827,00099,000
Less: Expenditure allowed but not debited in P/L A/c   
Depreciation u/s 32237,500 
Less: Income not taxable but credited to P/L A/c   
Sales to himself (goods withdrawn for personal purpose)830,000 
Recovery of bad debts94,500 
Overvaluation of closing stock107,500 
Less: Income taxable under other head but credited to P/L A/c   
Interest on Fixed Deposit1115,00094,500
Profits and gains of business or profession79,500


    1. Interest on capital to proprietor is not allowed as no one can earn from a transaction with himself.
    2. Depreciation as per Income tax shall be allowed
    3. Payment of life insurance premium is not allowed, hence disallowed. However, he can claim deduction u/s 80C
    4. Provision for bad debt shall be disallowed
    5. Income tax is disallowed u/s 40(a)
    6. No one can earn from himself.
    7. Any payment made for infringement of law is disallowed.
    8. Any expenditure of personal nature is not allowed. Further, no one can earn from a transaction with himself. Hence, sale made to himself is not treated as income.
    9. Since bad debt was disallowed earlier, recovery thereof is not taxable
    10. Due to overvaluation of closing stock income was inflated, so it is reduced from the income.
    11. Interest on fixed deposit is taxable under the head ‘Income from other sources’.


Question 12

  1. Subham furnishes the following information for the previous year 2020-21:
     GoldResidential House
    Property at Kolkata
    Date of purchase05-10-202015-10-2012
    Date of sale15-03-202210-12-2021
    Cost of acquisition (₹)1,00,00010,00,000
    Sale proceeds (₹)1,50,00055,10,000
    Expenses in connection with sales   5,00,000

    Subham purchased a new flat in New Town on January 15, 2022 for ₹ 15,00,000. Compute his taxable capital gain/loss for the assessment year 2022-23.

    [Cost Inflation Index (CII) : 2012-13 : 200; 2021-22 : 317]

  2. From the following information, state the availability of rebate u/s 87A.
    1. Total Taxable Income ₹ 4,75,000
    2. Total Taxable income ₹ 6,00,000
  3. Write a short note on exemption u/s 54EC

Answer 12

  1. Computation of capital gain of Mr. Subham for A.Y. 2021-22
    Sale consideration55,10,0005,00,000
    Less: Expenses on transfer5,00,000
    Net sale consideration50,10,0005,00,000
    Less: Indexed cost of acquisition  
    10,00,000 * 317/20015,85,000 
    Less: Cost of acquisition 1,00,000
    Less: Indexed cost of improvement
    Long term Capital gain34,25,000 
    Short term Capital gain 4,00,000
    Less: Exemption u/s 5415,00,000NA
    Taxable Long term capital gain<19,25,000
    Taxable Short term capital gain>4,00,000
  2. (i) Available (ii) Not available
  3. Refer Page 432

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